2018 UEM Edgenta Annual Report

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D.) 2.2 First time adoption of Malaysian Financial Reporting Standards (“MFRS”) (cont’d.) For the periods up to the financial year ended 31 December 2017, the Group and the Company prepared their financial statements in accordance with FRS in Malaysia. Except for certain differences, the requirements under FRS and MFRS are similar. Accordingly, the Group and the Company have prepared financial statements that comply with MFRS applicable as at 31 December 2018, together with the comparative period information for the year ended 31 December 2017, as described in the summary of significant accounting policies. In preparing these financial statements, the Group’s and the Company’s opening statements of financial position were prepared as at 1 January 2017, the date of transition to MFRS Framework. The transition from FRS Framework to MFRS Framework has not had financial impact on the statements of financial position, income statements, statements of comprehensive income and statements of cash flows except for those disclosed below: (a) Business combination MFRS 1 provides the option to apply MFRS 3 Business Combinations, prospectively from the date of transition or from a specific date prior to the date of transition. This provides relief from full retrospective application of MFRS 3 which would require restatement of all business combinations prior to the date of transition. Acquisition before date of transition The Group has elected to apply for MFRS 3 prospectively from the date of transition. In respect of acquisitions prior to the date of transition, (i) the classification of former business combinations under FRS is maintained; (ii) there is no re-measurement of original fair values determined at the time of business combination (date of acquisition); and (iii) the carrying amount of goodwill recognised under FRS is not adjusted. (b) Deemed cost Deemed cost exemptions relieves first-time adopters from the requirement to recreate cost information for property, plant and equipment and intangible assets. Deemed cost is the basis for subsequent depreciation and impairment testing. Upon transition to MFRS, the Group has elected to measure all its property, plant and equipment and intangible assets using the cost model under MFRS 116 Property, Plant and Equipment and MFRS 138 Intangible assets. (c) Investments in subsidiaries, jointly controlled entities and associates A first-time adopter is permitted to choose the measurement basis for its investments in subsidiaries, jointly controlled entities and associates in its separate financial statements. A first-time adopter that measures such investments at cost is permitted to measure the investments either at cost determined in accordance with MFRS 127 or at “deemed cost”. Deemed cost for this purpose is either the: (i) Fair value at date of transition; or (ii) Carrying amount under FRS at date of transition. The Company has elected to measure its investments in subsidiaries and associates at carrying amount under FRS at date of transition. The Group has consistently applied the same accounting policies in its opening MFRS statement of financial position as at 1 January 2017 and throughout all comparable periods presented, as if these policies had always been in effect. Comparative information in these financial statements have been restated to give effect to above changes. The two newly effective standards which were adopted pursuant to the adoption of the MFRS Framework, namely MFRS 15 Revenue from Contracts with Customers and MFRS 9 Financial Instruments have resulted in the following key changes to the financial statements. NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2018 Management Discussion & Analysis UEM Edgenta Berhad Annual Report 2018 About UEM Edgenta Chairman’s Statement 156